Delhi Metro set to suffer Reliance Infrastructure Rs 5,164 cr award hit over Airport Express line

Arbitration payment to Reliance Infrastructure (RInfra) is set to hit Delhi Metro Rail Corporation (DMRC) hard as the loss-making metro rail body will have to shell out over Rs 5,000 crore as loan repayment with interest to Airport Express Line. Earlier this month, the Delhi High Court directed DMRC to service the entire debt of RInfra.

“As per the interim order, DMRC will have to start servicing Delhi Airport Metro Express Private Ltd’s (DAMEPL) debt to 11 banks, which had lent to the infrastructure major’s subsidiary to run the Airport Express Line,” said RInfra’s spokesperson. DMRC refused to comment on the arbitration amount payment to RInfra and stated that “the matter is subjudice”.

In August 25, 2008, DMRC and RInfra had signed concession agreement wherein the former was to undertake civil works, excluding the depot, while the project system works were to be executed by DAMEPL.

The project was commissioned on February 23, 2011 after an investment of over Rs 2,885 crore by DAMEPL.

On June 30, 2013, DAMEPL handed over the project, which DMRC claims RInfra had abandoned and did not allow it to remain shut forever. Later in August 2013, arbitration process commenced.

DAMEPL’s total debt amounts to Rs 1,618 crore, apart from the capital infused by RInfra into the project.

The court observed that DMRC cannot shy away from paying 80% of the debt owed by RInfra’s subsidiary DAMEPL to the banks.

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“Given their financial situation, DMRC will have to arrange funds from extra-budgetary resources to pay to RInfra. Secondly, it will take about 5-7 years for them to clear this amount from their balance sheets,” said a Mumbai-based analyst to DNA Money.

DMRC’s losses, borrowings and finance cost has been piling up every year, and now with Delhi High Court’s judgement the debt level to service will further hurt its financials.

As of March, India’s largest metro operator is supposed to pay Rs 5,164.79 crore to RInfra’s subsidiary DAMEPL.

During the fiscal period 2012-13, DMRC registered a net loss of Rs 90.90 crore, after having earned Rs 2,687.48 crore from fares and non-fares. In the same year, its borrowing stood at Rs 19,175.70 crore while interest and finance cost was Rs 216.55 crore.

In 2016-17, the metro operator’s net loss widened to Rs 229.35 crore, despite an increase in revenue to Rs 5,387.98 crore.

However, borrowings shot up to Rs 34,173.64 crore on higher capex incurred by the company to reach into more areas of Delhi. Similarly, its interest and finance cost also increased to Rs 240.12 crore during the period.

Further, the network size increased from 8.5 km in 2002 to 190 km in 2012-13 and from 217.87 km in 2016-17 to the current 252 km.

In order to create the fourth largest metro network in the world, the plan is underway to expand the network to about 360 km on completion of third phase later this year.

By Ateeq Shaikh, DNA Money